Monthly Archives: May 2013

Denmark is Doing the American Dream Better than America

Bernie Sanders has discovered utopia: Denmark. The small country has managed to provide universal health care, extensive parental leave, and generous vacation and unemployment benefits. The result: happiness, equality, and social mobility.

This strikes at the core of the American fallacy: the idea that decadent wealth and abject poverty provide an incentive for the poor to pull themselves up by their own bootstraps. It turns out that the opposite is true. Last week, I wrote about the demise of the American dream of meritocracy and equality. Today, I’ll expound on that post by looking at the “Nordic Model.”

Denmark’s success has been noted before: The Economist recently hailed the Nordic model as an expansive and thick social safety net beside vibrant capitalism as the next “supermodel.” The evidence is strong: the four Nordic countries rank at the top for entrepreneurshipeducation,happiness, health indicators, equality and social mobility.

What are they doing right? First off, they aren’t socialist utopias; the countries have  actually embraced capitalistic reforms: charterish schools, low budget deficits, low corporate income taxes and sweeping pension reforms.

So what’s the big deal? How do they find the perfect balance? Three factors explain most of the success of the Nordic model: universal health care, public financing and education.

America has always praised its entrepreneurs; it does little however, to protect those who fail. Taking risks in America could mean risking your health insurance, since many Americans get insurance from their job. Poor families have little access to preventative care, and therefore are more susceptible to diseases like hypertension and diabetes where early discovery is key.

Lack of health insurance makes it harder to climb up the economic ladder. Anne Case and Christina Paxson find that poor children receive inadequate health care which dampens their upward mobility. Recent research by three Harvard researchers found that the percentage of bankruptcies caused by medical problems increased by 50% between 2001 and 2007. Inadequate health care systems increase inequality and makes it harder for poor Americans to share in the wealth and take advantage of opportunity.

Secondly, in America public policy is essentially defined by the wealthiest Americans. Two political scientists, Martin Gilens and Larry Bartels have both found (independently) that the the U.S. political system is entirely unresponsive to the preferences of poor Americans. In 2005, Larry Bartels examined how responsive Senators were in the 101st, 102nd and 103rd congress to the preferences of various constituents. His findings are summarized in the chart below.

In America, wealthy individuals and corporations define the political dialogue, labor unions have been crushed and voters, sensing the inequality, have become disenchanted.

In contrast, the Nordic countries all have a system of public financing and a vibrant labor movement. Consequently, politicians are responsive and voters actually care enough to show up at the ballots (it’s worth noting the number of female Prime Ministers in the Nordic countries: Helle Thorning-Schmidt in Denmark, Tarja Kaarina Halonen in Finland and Jóhanna Sigurðardóttir of Iceland — also the first lesbian head of state in history).

The education system in Nordic countries is also preferable to the American system. Parents are granted gracious leave to be with their children in the earliest years of development (in America parental leave is reserved for the upper middle class). Sweden is experimenting with a voucher option that allows children from poorer backgrounds to attend the same schools as wealthy students. In America we have a two-tiered education system: great schools for the rich, awful, underfunded schools for the poor. College is free and in many countries, so is graduate school. Rather than seeing education as a service, in the Nordic countries it is seen as an investment. Graduates leave college debt-free and can pursue their dreams without the fear of paying off debts.

The results are staggering. Nordic countries (well, all developed countries) spend far less on health care and yet insure all of their citizens. It’s certainly a crude measure, but I’ve charted health care spending and life expectancy for OECD health care systems. The Nordic countries vastly outperform the U.S., which pays exorbitant costs for health care with little to show. This is actually slightly untrue; in America there are two health care systems: one, which works incredibly well, but serves only about 10% of the population and the other, which delivers little but bureaucracy and unnecessary procedures.


And they’ve succeeded where America has failed: upward mobility. The chart below shows what’s called Intergenerational Earnings Elasticity. It’s a measure of how much social mobility exists within a society. The higher the number, the more a child’s earnings correlate with their father’s. A lower number indicates more social mobility. We see the Nordic countries have the highest rate of upward mobility.

The Nordic model exemplifies a centrist attitude toward government. The government doesn’t just redistribute wealth, nor does it leave everything to markets. It opens opportunity for everyone — and they take it. Until Americans embrace the politics of opportunity — the idea that everyone should have access to good health care, a good education and a voice — the American dream will continue to remain more fable than fact.

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More Gun Laws, Less Crime

Gun rights advocates are jumping at recent polls showing that gun violence has decreased and the public is unaware of this phenomenon. Rush Limbaugh argues that, “as America arms up, gun violence goes down,” parroting the infamous book by Dr. John Lott, More Guns, Less Crime. Emily Miller argues in theWashington Times that, liberals have been “muzzled” by the news. But, in fact, research shows that those who oppose gun control ask the wrong questions.

Let’s begin with the question of declining violence and the public’s unawareness of this decline (which has been chalked up to the “liberal media”). It should be chalked up to “media.” As Steven Pinker notes in The Better Angels of Our Nature violence has been declining everywhere, and yet few people are aware because, as much as a despise cliché “if it bleeds, it leads.” People drastically overrate the possibility of their children being kidnapped, for example, because of prominent media coverage. They underrate their child’s chance of drowning in a pool. Sadly, since gun violence is still sexy, it will dwarf coverage of other deaths. All violence has declined, but gun violence still amounts to a good portion of it. And being an economist, it represents a sort of violence which is easy to decrease on the margin: something we can easily reduce without significant harm to society because nothing has addressed it as of yet.

But let’s dig deeper, into the assumption of the gun rights advocates. Do more guns mean less crime? Is the only thing that stops a bad guy with a gun? As Jon Stewart brilliantly points out, identifying a bad guy is nearly impossible without gun control. Furthermore, much gun violence is committed by “normal guys” in a violent passion.

Let’s start with Dr. Lott’s work, which is still cited and published without even a cursory investigation of its widely known flaws. The research the formed the basis of More Guns, Less Crime has been entirely discredited. In 2005 the National Research Council made up of policy heavyweights including Charles Wellford, James Q. Wilson, Joel Horowitz, Joel Waldfogel, and Steven Levitt, issued its wide ranging report in 2005 concluding that the data provided no reliable and robust support for Lott’s conclusion. Other studies have found that Lott’s research was  plagued by simple coding errors. Recent research, performed by Abhay Aneja, John J. Donohue III and Alex Zhang found simple coding errors and flaws Lott’s econometric models. For instance, Lott failed to control for incarceration rates and the size of the local police force. When Aneja et al ran the correct numbers, they concluded that, “with the current evidence it is not possible to determine that there is a causal link between the passage of right-to-carry laws and crime rates.”

Still, is “More guns, less crime” the question we should really be asking? Most gun control advocates simply want commonsense measures, like getting rid of the gun show loophole, universal background checks and high capacity magazine bans have almost universal public support, especially among responsible gun owners. They have such support for good reason: they actually work.

We know because tons of other countries have reduced their gun violence by reducing guns; Australia is the most recent example. Having a gun in your home makes you vastly more likely to take your own life. A 2006 study published in Public Health finds that, “the proportion of firearm suicides decreased simultaneously with the proportion of households owning firearms. This result is in line with the well-established association between availability of firearms at home and risk of firearm suicide.”

But, in fact, the aggregate number of guns in society isn’t really what we want to control: we want to keep guns out of the hands of those who are violent, criminal or mentally challenged. I don’t have a problem with responsible citizens using guns that they have obtained with a permit, after undergoing a background check and using a gun with only a small magazine capacity. So the real question is not, do more guns lead to more crime, but, do stricter regulations reduce crime? In fact, they do. Here’s a chart from a recent study by the Center for American Progress.

More Gun Laws, Less Crime

Their finding: “While many factors contribute to the rates of gun violence in any state, our research clearly demonstrates a significant correlation between the strength of a state’s gun laws and the prevalence of gun violence in the state.”

So certainly, violence is down, and often, high levels of gun ownership can exist with low levels of crime (just not often). The real question is: does gun control work. The evidence is in. Now let’s hope the politicians listen.

This article was originally posted on

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Drones: Made in America, Sold to Militaries Everywhere

We’ve known for a while that drones are becoming ubiquitous, sadly, two years before the FAA will have any rules. Already, the military is using drones to terrorize Yemeni villagers and police officers to spy. But with the recent Silicon Valley interest and boom in drones comes worrying questions.

The U.S. drone program has always been a bit shady. We know, for instance that the U.S. gained access to Pakistani airspace by covertly assassinating the Pakistan government’s enemies of state. Luckily for the U.S. government, Americans have a stunning ability to not care about anyone who does not share their nationality and/or race, and therefore the government’s drone actions have gone uncontested.

Now corporations are getting into the mix, with large funding from Silicon ValleyAs I’ve noted before, drones certainly have legitimate uses. However, there is the potential that weaponized drones will be shipped overseas. NBC reports that the Pentagon has approved 66 nations as eligible to purchase U.S. drones. More worrying is the possibility that private corporations will secretly (or openly) sell their wares to foreign governments to be used for repression, or even attacks against the U.S. (hardly an unprecedented move).

The industrial half of the military-industrial complex are eager to start exporting weapons. Michael Buscher, CEO of Vanguard Defense Industries said, “I don’t see the domestic market as being such a boom, our bread and butter is still going to be overseas foreign military sales.”

I urge you to read that twice.

Some are raising concerns about exporting UAV technology. Daryl Kimball, executive director the Arms Control Association warned, “The proliferation of this technology will mark a major shift in the way wars are waged. We’re talking about very sophisticated war machines here. We need to be very careful about who gets this technology. It could come back to hurt us.” Dianne Feinstein has also raised concerns, telling the Wall Street Journal that, “there are some military technologies that I believe should not be shared with other countries, regardless of how close our partnership.”

We must certainly be careful about who gains control of the drones. In February General Atomicssold a predator drone to the United Arab Emirates. This marks the first time U.S. drones have been sold to a non-NATO country. More such sales are likely to come, especially in the developing world. It would be nice if the drones were used only to water crops, but I’m unaware of any predator drone farmer helper kits. Arms can easily change hands and allies can become enemies.

Remember the Mujahideen?

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Social Class: The Next Affirmative Action?

The Supreme Court is set to decide soon on Fischer v University of Texas. The court will likely focus on whether the university has reached a “critical mass” of minority students (enough that minority students no longer feel isolated), the test put forward in the seminal affirmative action case, Grutter v Bollinger. Many observers believe it appears likely the court will ultimately bar public universities from using race in their admissions policies. It will therefore be all the more important for universities to adopt a system of affirmative action based on socioeconomic status..

According to a recent study by the Century Foundation, one is twenty-five times as likely to run into a rich student as a poor one at the nation’s top 146 colleges.

It was not always like this. A 2011 study for the National Bureau of Economic Research by Martha Bailey and Susan Dynarski finds “even among those who had the same measured cognitive skills as teenagers, inequality in college entry and completion across income groups is greater today than it was two decades ago.” Between 1979 and 1997, “the gap in the college entry rate between the bottom- and top-income quartiles increased from thirty-nine to fifty-one percentage points.” This shift is largely due to financial difficulty, largely because of the high cost of college education, and not cognitive ability.

Claudia Goldin and Lawrence Katz find that educational disparities are largely responsible for the recent increase in income inequality. Income inequality further perpetuates poverty by making it harder for poor students to escape from poverty. In 2012 Alan Krueger presented what he described as the “Great Gatsby Curve,” reproduced below, which shows the correlation between inequality and social mobility.


Basically, the greater the difference between rich and poor in a society, the harder it is to become rich if you’re born poor.

This isn’t that surprising, but education can help fix that problem. The key to mobility is a college education, so the best way for college to alleviate the growing inequality and thereby increase social mobility would be to adopt socio-economic affirmative action. SES AA is already practiced by some colleges. Public universities in California, engage in a “comprehensive review, “examining academic accomplishments in light of such obstacles as ‘low family income, first generation to attend college,’ and ‘disadvantaged social or educational environment.’ ” The system has increased overall diversity.The Century Foundation finds, “The proportion of blacks and Latinos who made up new freshman initially declined from 18 percent in 1997 to 15 percent in 1998,but by 2008, it reached 24 percent.”

2008 study by Matthew Gaertner at University of Colorado Boulder finds that SES AA may be an effective replacement for race-based AA. Gaertner studied what would happen if UC Boulder replaced its race-based affirmative action program with a class-based alternative system. The SES model would, when examining the grades of students, it take into account the socio-economic status of the student and her school, whether English is a first language, whether the student grew up in a single-parent home and compares the student’s scores to the scores of other students he attended. The result, of this system Gaertner writes, was that

low-SES [socio-economic status] applicants and those identified for additional consideration under the Metrics are more likely to be admitted under class-based than under race-based affirmative action. Finally, underrepresented minority (URM) applicants (i.e., Blacks, Hispanics, and Native Americans) are more likely to be admitted under the class-based approach than under the race-based policy.

Other researchers have replicated Gaertner’s findings. A recent Century Foundation study finds, “seven of the ten universities examined using race-neutral plans—UT Austin, Texas A&M, the University of Washington, the University of Florida, the University of Georgia, the University of Nebraska, and the University of Arizona—the representation of African Americans and Latinos met or exceeded the levels achieved when the universities had used racial preferences.” This publication’s college rankings confirm this finding. Richard D. Kahlenberg writes, “Among the 258 national universities listed in the Washington Monthly’s ranking, five of the top 10 in the social mobility category are located in California, which banned racial preferences in 1996.”

Class-based affirmative action, in fact, might be very useful even if race-based affirmative action remains in place. Another recent Century Foundation study finds that, “socioeconomically disadvantaged students are expected to score 399 points lower on the math and verbal SAT than the most socioeconomically advantaged, while blacks are expected to score 56 points lower than whites.” The country is leaving behind a large portion of its citizens and rendering the promise of the American Dream a farce.

Socioeconomic affirmative action is not a new idea. In fact, Martin Luther King, Jr. suggested it in his Bill of Rights for the Disadvantaged, writing “While Negroes form the vast majority of America’s disadvantaged, there are millions of white poor who would also benefit from such a bill.” He’s right, and it’s time for a policy that allows all disadvantaged children a better chance to participate in the American Dream.

This piece originally appeared on Washington Monthly.

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America Still Needs Affirmative Action

With the Supreme Court considering Schuette v. Coalition to Defend Affirmative
Action and Fisher v. University of Texas, affirmative action has entered into the public eye again. Notably, The Economist’s cover story last week argues that its time for an end to affirmative action

Before the 1960s, when the foundations of affirmative action were first laid down,
most blacks were poor, few served in public office and almost none were to be
found flourishing at the nation’s top universities, corporations, law firms and
banks. None of that is true today.

But is it really time to get rid of affirmative action? There are two arguments for
affirmative action: first that diversity in education is good for students (there is solid
research backing up this assertion, which The Economist recognizes) and second that the
obstacles an African-American student has to overcome just to apply to college merits a
leg up.

Since The Economist concedes the first point (arguing that while diversity is
good, we can achieve it without affirmative action), the second argument is the one they
primarily attack. And yet it couldn’t come at a worse time. The wealth gap between
whites and blacks has grown, in fact, it has tripled. The study by Thomas Shapiro,
Tatjana Meshede and Sam Orso find that a college education is a huge driver of that gap.
A study by Martha J. Bailey finds that the college entry gap between the rich and poor
has widened drastically over the past 40 years, driven largely by inequality.

The truth is, African-Americans aren’t flourishing in public office. There are only
two African-American senators (and there has only ever been one black senator in the
south, and he was appointed, not elected). There is currently only one black governor and
there have been few in the last 100 years. Much of President Obama’s cabinet is
conspicuously white and male. The truth is that blacks are drastically underrepresented in
the political sphere. There have only been 13 black CEOs of a Fortune 500 company.
Ever. Another study finds that a mere 14 percent of college presidents are minority.
African Americans still deal with the legacy of racism and oppression. Many
blacks alive today can remember redlining, and lack of a home is still a major driver
of black poverty. The average inheritance of a black baby boomer is $8,000 while the
average inheritance of a white baby boomer is $65,000. Elementary and high schools
are still highly segregated and schools with high minority populations are underfunded.
In these circumstances, affirmative action is not an unfair boost, it is rather an equalizer.
Students who grow up in poverty, attend an underfunded and understaffed school, who
don’t get preschool or summer school and still manage to score close to pampered child
in public school certainly deserve aid.

The Economist believes that with the abolition of affirmative action, we’ll have
more meritocracy. But that’s unlikely. Martha Bailey (cited above) finds that the main
reason for the college entry gap between rich and poor is not due to cognitive ability,
but rather poverty, “Even among those who had the same measured cognitive skills as
teenagers, inequality in college entry and completion across income groups is greater
today than it was two decades ago.”

But does affirmative action help? The Economist cites the research of Richard
Sander extensively. Sander published a study in 2004 that found that black students
who were accepted into school because of affirmative action failed to obtain a degree
and therefore there should be less affirmative action. Odd that The Economist doesn’t
even consider a critique of that study, published later that year by David L. Chambers,
Timothy T. Clydesdale, William C. Kidder, and Richard O. Lempert. Chambers et al
found that,

Out analyses of both the NSLSP [National Survey of Law School Performance]
and BPS [Bar Passage Study] thus reveal that Sander is wrong when he concludes
that the current lower performance by African Americans in law school is ‘a
simple and direct consequence of the disparity in entering credentials between
blacks and whites.’ It is not.

They find that without affirmative action, “both the enrollment of African American law
students (particularly at the fifty or eighty most selective schools) and the production
of African American lawyers would significantly decline.” The same thing is likely to
happen in other colleges. Without affirmative action, the already dismal numbers for
African-Americans entering and graduating college may decline even further. Someday
we’ll be at a point where we can end affirmative action. The Economist (and much of the
Supreme Court) is jumping the gun.

This article originally appeared on

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